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Top fund manager sees sharp fall in global dividend payouts

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Leading fund manager Janus Henderson has reported a sharp fall in global dividends declared in the June quarter. Australia was reported to account for a significant amount of the decline in the Asia Pacific region.

Global dividends fall by 24% in June quarter

According to a study undertaken by Janus Henderson, global dividends fell by $129.02 billion to $527.8 billion in the June quarter. The 24% decline (in AUD) was the worst since Janus Henderson first launched the dividend study back in 2009.

Janus Henderson found that 27% of companies that paid a dividend during the June quarter cut their dividends. And of this subset of companies, more than half made the decision to totally cut any dividend payment at all.

Financial services and consumer discretionary were the most impacted industries. Within Europe and the UK, some financial companies were impacted by regulatory bans on dividends. In Australia, the industry was subject to regulatory pressures.

In contrast, companies in the healthcare and communications sectors displayed a much higher degree of resilience to any dividend cut due to COVID-19.

Janus Henderson anticipates headline global dividends to fall by around 17% in a best-case scenario in 2020. A worst-case scenario could see them drop by 23%.

Australia heads the Asian dividend decline

Australia suffered the greatest impact within the Asian region, and more dividend cuts are anticipated in Australia in the September and December quarters. In comparison, the Japanese market was relatively insulated from any dividend cuts.

The decision of Australian retail bank giant Westpac Banking Corp (ASX: WBC) to scrap its interim dividend accounted for a staggering 60% of the entire dividend decline across the APAC region. Westpac did, however, note in its third quarter results that it would consider issuing a dividend when finalising its annual results. Westpac’s financial year ends 30 September 2020.

The dividends decision was made under new APRA guidelines to provide a buffer to banks from any excessive COVID-related impact. Meanwhile, Commonwealth Bank of Australia (ASX: CBA) cuts its dividend by 50%

Rio Tinto leads the list of top Aussie dividend payers

Janus Henderson also noted the top the top 6 dividend payers in Australia, with Rio Tinto Limited (ASX: RIO), Fortescue Metals Group Limited (ASX: FMG)  and Woolworths Group Ltd (ASX: WOW) topping the list. They were followed by CSL Limited (ASX: CSL), QBE Insurance Group Limited (ASX: QBE) and Brambles Limited (ASX: BXB).

Jane Shoemake, investment director, global equity income for Janus Henderson, said:

Despite it being a quiet period for Australian dividends, our most recent report shows the lower payouts in Australia made a significant impact. This is where the benefits of taking a globally diversified approach to income investing becomes clearest. Some payments were just deferred, and we have already seen some returning, albeit with a wide margin of uncertainty. Some of those that have been deferred will be paid in full, some will be paid but at a reduced level, and others will be cancelled outright.

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Phil Harpur owns shares of CSL Ltd. and Westpac Banking. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of Woolworths Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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